CBDC, an acronym for Central Bank Digital Currency, complements the crypto sphere. These tokens are issued by the respective Central Banks of a country to retail and institutional investors. They are pegged to the fiat currency at 1:1. The goal is to embrace the concept of digital money without having the citizens go through the volatility factor. Needless to say, CBDCs are more stable and reliable than cryptos like BTC and ETH, to mention a few.
In a recent announcement, the Atlantic Council said that members are crafting an agenda around the concept of CBDC. This comes in the wake of more than a hundred countries, or their central banks, actively working to integrate the said digital currency into their economies.
There is an active pursuit of CBDC by countries for two major reasons: financial inclusion and the enhancement of monetary policy. Plus, it gives developers a wide range of reasons to work on their own design, programmability, and accessibility.
While there are a lot of challenges for market participants, regulators, and individuals, there is nothing to deny the fact that CBDCs are the next big thing for countries across the globe. It only remains to be seen how countries integrate their digital tokens with other countries, or if an agreement is ever reached, that mirrors the mechanism of fiat currency conversion.
The Atlantic Council has called this a transformational moment in the history of money, adding that there is a dire need to prioritize because a lot of aspects intersect with international bodies.
For instance, developments pertaining to CBDC come under the umbrella of the IMF – International Monetary Fund. This is purely based on the financial stability that digital currencies are attempting to achieve. Similarly, the World Bank will have its arm around CBDC based on the level of developmental potential that drives its adoption. Finally, BIS (Bank for International Settlements) has been coined as a natural forum for discussion.
Overall, the efforts of IFIs, that is, International Financial Institutions, are directed toward developing a governance architecture that applies to implementing CBDC in all countries. It will be a common ground of development to be considered by all the countries. It focuses on three domains: development, financial stability, and financial inclusion.
Moreover, heavy considerations have been made for challenges, risks, and opportunities. That said, the cryptosphere remains in the dark. While ETH has sustained the milestone of $2,500, BTC has fallen behind in its endeavor to chase ATH. The token was last seen exchanging hands at $42,788.02, dropping 0.23% in the last 24 hours. Making things worse is the fact that the value represents a significant fall of 6.31% in the last 7 days. However, it still counts on the greener side, with a jump of 2.23% in the last 30 days.